Summarize the case in your own words. hree e of Case 2-3 Ford Motor Company: Ali

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Summarize the case in your own words.

hree e of Case 2-3 Ford Motor Company: Aligned Business Framework? Tony Brown, senior vice president of global sourcing long-term financial stability and profitability. The question at Ford Motor Company (Ford), was putting the finish- ing touches on his plan for the company's new supply remained, however, how he would convince Ford's supplier chain strategy"Aligned Business Framework" (ABF). community to commit to the principles of ABF. ABF was a boli step that would significantly change the relationships between Ford and its suppliers. Tony FORD MOTOR COMPANY described his motivation: "We want to operate a supply chain management system that delivers on the dimen- Founded in 1903, Ford was the no. 2 U.S. automaker with sions of quality, technology, delivery and cost, while global sales of approximately $177 billion. In 2005, its executing programs in a disciplined fashion with faster global brands included Ford, Lincoln, Mercury. Jaguar. Land Rover, Aston Martin, and Volvo. In recent years all time-to-market. "3 of the "Detroit 3" (General Motors, Ford, and Chrysler) It was August 10, 2005, and Tony was expected to re- automakers were struggling under intense global com- view the final details of his proposal with company chair- man and CEO William Clay (Bill) Ford Jr. before making petition, rising fuel prices, and steep product discounts and rebates. In the most recent quarter, Ford reported a a formal public announcement the following month. ABF $1.1 billion operating loss and the company's debt had would substantially reduce the number of suppliers and give those that remained long-term contracts and early involve- recently been downgraded to junk-bond status. To turn around company performance, Ford had announced plans ment in new product development programs. Tony expected to cut its salaried workforce, reduce capacity by closing that the strategy would provide benefits to Ford through plants and selling the Hertz rental car division, and ramp overall lower costs, while suppliers would benefit from up production of hybrid vehicles. 2 This case has been written on the basis of published sources only. Consequently, the internretation and an- in this caca ara nnt na

Explanation / Answer

Ford is facing rise in the cost across supply chain, reduction in sale and distress financial condition of company and suppliers. Company is having manufacturing plant in 60 countries and 107 sites. It has total 2500 production and 9000 non-production suppliers. ABF targeted to reduce cost by 10% of the Ford’s annual spend of production parts.

Company has bad reputation in terms of supplier relationship. It has placed second last position for relationship with supplier among car manufacturer. Current strategy with supplier includes bonus and annual performance measurement based on year on year price reduction objectives. But these objectives have created confrontational relation with supplier. Current strategy is not working well either for company or for supplier. It requires some paradigm shift from this strategy.

So, Tony has come up with Aligned Business Framework strategy. In this strategy number of suppliers will be reduced greatly to 100 production suppliers. New environment of innovation and collaboration will emerge. Supplier will be part of product development phase. This should achieve quality, cost and achieve delivery goals. This will provide financial stability, increase on capacity, reduced cost and stable revenue to suppliers.

But the question here is will supplier support this new change? Will they trust or rely on this new change? How would the associated cost and benefit of the program will be measured? And how same will be shared between company and suppliers?

Tony is pondering on these question for meeting with Ford Jr.

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